Analyst Downgrades: Keurig, Ralph Lauren, and Costco

Analysts downwardly revised their ratings on Keurig Green Mountain Inc (GMCR), Ralph Lauren Corp (RL), and Costco Wholesale Corporation (COST)

Feb 5, 2015 at 9:24 AM
facebook twitter linkedin

Analysts are weighing in today on coffee concern Keurig Green Mountain Inc (NASDAQ:GMCR), apparel issue Ralph Lauren Corp (NYSE:RL), and bulk retailer Costco Wholesale Corporation (NASDAQ:COST). Here's a quick roundup of today's bearish brokerage notes on GMCR, RL, and COST.

  • GMCR is down almost 9% in electronic trading, after a fiscal first-quarter earnings miss and downwardly revised full-year earnings outlook was met with no fewer than four price-target cuts. Included in the bunch was Buckingham Research, which slashed its target price by $16 to $104, and CLSA, which reduced its price target by $10 to $120 -- roughly in line with last night's close at $121.20. It's been a slow start to the year for Keurig Green Mountain Inc, which has shed 8.5%, and options traders have been growing more restless ahead of last night's results. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), GMCR's 10-day put/call volume ratio of 0.98 ranks in the bearishly skewed 80th percentile of its annual range.

  • RL suffered its biggest one-day drop on record yesterday, after the firm offered up a lower-than-expected fiscal third-quarter earnings report, and cut its full-year revenue outlook for a second time. The stock could extend these losses in today's session, after receiving a round of bearish brokerage notes. Goldman Sachs, for example, cut its rating on RL to "neutral" from "buy," removed the equity from its "America's Buy List," and slashed its price target by $40 to $156. Elsewhere, Maxim lowered its price target to $130 from $155, and underscored its "hold" rating. On the charts, the shares have lost 24.5% in 2015, and more downgrades and/or price-target reductions could be on the horizon, should this negative price action continue. Currently, seven out of 14 covering analysts maintain a "buy" or better recommendation, with not a single "sell" to be found. Additionally, Ralph Lauren Corp's average 12-month price target of $170.89 stands at a 22.3% premium to Wednesday's close at $139.71.

  • After hitting its highest perch on record on Wednesday, COST is nearly 4% lower ahead of today's opening bell. Sparking this risk-off attitude is a downgrade to "hold" from "buy" at Deutsche Bank -- which also weighed in on fellow retailer Kohl's Corporation (NYSE:KSS) yesterday -- and a price-target cut to $142 from $147. Technically speaking, Costco Wholesale Corporation has been a standout, boasting a 41% year-over-year lead to trade at $150.92. Against this backdrop, the stock's 14-day Relative Strength Index (RSI) of 77 is sitting in overbought territory, suggesting a near-term pullback may have been in the cards.

If you are not making money with options, you aren’t buying options like this…

There is no options strategy that more perfectly approaches trading the fastest moving and most volatile stocks available in the marketplace than this one. In fact, there is no strategy that better utilizes put options for optimal returns and a real trading edge over other traders in the exact same market. New options traders fail out at an incredible rate without proper trade research, execution timing, and option picking. Capitalize on Schaeffer’s 100+ years of options trading excellence with the most coveted product launch in company history. Don't waste another second... join us right now before the next round of trades are released!



Special Offers from Schaeffer's Trading Partners